Supply of homes on the market increased to the highest level since March 16.

Demand for housing also rose in October

Sales averaged - 9 per branch.

Properties for sale averaged - 43 per branch.

Registered buyers per branch increased to 440.

NAEA's Mark Hayward, comments :

“This month’s report paints a positive picture for the UK housing market. Our findings over the last few months indicated mild uncertainty immediately following Brexit – and last month we even saw sales to FTBs fall. After shrugging off the uncertainty, we have seen an increase in supply and a rise in the number of sales to FTBs this month – proof the market is beginning to bounce back.

“Clearly what we need now though is a clear plan as to how the Government is going to tackle the chronic shortage of homes that we are facing. During the Autumn Statement, the Chancellor announced a boost to house-building which is a start but sadly nowhere near enough. We have high hopes for the Housing White Paper as this will set the housing strategy and intent for this Government going forward.”

Monday, November 28, 2016

Avoiding letting agent fees

Landlords are faced with legislation changes proposed in the Autumn Statement bringing changes that will result in landlords having to bear the full brunt of letting agent fees. This follows from the Chancellors Philip Hammond's first Autumn statement 2016 in which the incoming Chancellor marked himself out as no friend of landlords and a hero of the tenanted classes.

His proposed ban on letting agent fees means that in a single stroke 4.3 million renting households will be removed from the obligation of having to pay letting agents fees such as:

What are the likely affects of the letting agent fee ban?

The reality is that letting agents still need to charge fees for many of the actions that they carry out in their duties. It will continue be an expense in administrative time and effort to register tenants for tenancies and to carry out the required checks for landlords to be happy that the tenants is a reasonable credit and letting risk. This means that many letting agents will just pass these charges on to the landlord or try to avoid doing the appropriate letting checks in the first place exposing landlords to additional risks of letting particularly if they inexperienced landlords unaware of the potential pitfalls. The additional costs as you can see about if these letting agent fees are passed on to a landlord could amount to many hundreds of pounds to a landlord for each letting so can letting agency fees be avoided?

Letting agent fees - how to avoid them?

The reality is that all landlords can avoid letting agent fees simply by managing their own rental properties. It really is entirely possible not to use a letting agent at all. Now with online property marketing such as Lettingaproperty and similar marketing virtual letting agents and marketing websites a landlord can market their property to the whole world by getting their property on the likes of Rightmove and Zoopla giving them maximum marketing exposure. Then having secured their marketing leads an individual landlord is free to do all the checks and essential letting administration that the letting process requires. It's perfectly possible for a landlord to do the credit check on line for a few quid. We have told landlords how they can do the vetting of a tenant far more effectively than any letting agent and save a fortune in the process. Who needs a letting agent to prepare the inventory? Landlords can manage their property with our online software and avoid the fees that will now have to be paid to letting agents. This legislation could be a game changer for many landlords determined to avoid unecessary letting costs. Other landlords will just conclude that it is another necessary expense that they will try where possible to pass on to their tenants by raising the rent. The experience from Scotland where the introduction of similar restrictions has been that the added costs have not been translated into inflated rents.

Thursday, November 17, 2016

The finalised PRA regulations for buy-to-let mortgages were published at the end of September and there are concerns amongst some in the industry about how the prescribed changes to underwriting standards are going to affect the market and how much more complex arranging finance for landlords will become.

For shorter-term buy-to-let rates, the PRA has stipulated a minimum interest coverage ratio (ICR) of 125% and have a minimum stress test interest rate of 5.5%. Also, when assessing customer affordability, lenders are now expected to take account of the likely interest rate increases during the first five years of the mortgage contract. However, for fixed rate buy-to-let mortgages of five years or longer, these requirements do not apply and there are already some lenders, for example Newcastle Building Society, offering different rental calculations for five-year fixed rate products.

The PRA has set 1st January 2017 as the deadline for lenders to implement these new measures for ICR tests, so over the next couple of months we can expect a raft of changes to lenders’ rental calculations. One of the common concerns raised is that landlords in certain areas of the country where rental yields are lower, for example London and the South East, will find it difficult to meet the new stress tests.

It has also been suggested that as the overall yield for buy-to-let properties varies so greatly around the UK, we may see some lenders having geographical ICRs for different areas of the country, which will add another layer of complexity to the already challenging task of sourcing the most suitable buy-to-let mortgage for landlords.

The PRA underwriting standards policy has confirmed that “lenders can use personal income as a means for the borrower to supplement the rent within their affordability test”. This is likely to result

in a wide range of approaches by lenders when assessing customer affordability, which may affect the choice of products available to clients and further increase the complexity of lending criteria.

With reduced buy-to-let tax relief coming into effect in 2017, lender’s may also offer different rental calculations depending on the client’s tax status, with higher rate tax payers being subject to more stringent affordability tests.

Alongside the PRA’s expectation for ICRs and interest rate affordability stress tests, the underwriting policy also makes a special case for portfolio landlords, who are defined as having “four or more distinct mortgaged buy-to-let properties.” It is indicated that as lending to portfolio landlords is “inherently more complex”, lenders should take a specialist (presumably more lengthy and in-depth) underwriting approach to these borrowers.

It is possible therefore, that we will begin to see a distinct split between lenders in the buy-to-let mortgage market, with large specialist lenders dealing with portfolio landlords on one side and lenders who opt to deal only with smaller landlords with 3 or less properties on the other side.

Without doubt, the buy-to-let mortgage market will undergo significant change over the next 12 months and sourcing finance for landlords will become increasingly complex.

Agents manage an average 193 rental properties, an eighteen month high (183 in Aug)

Demand from prospective tenants rose to 40 new registrations, (37 in Aug )

Agents witnessing rent hikes fell to 24%, ( down from 27% in Aug )

ARLA's David Cox, comments - “

This month’s findings paint a really positive picture for renters. Although demand is rising, we’ve seen this happen gradually over the course of the year, and would expect it to slow again in line with seasonal trends over the next few months. On the other hand, the supply of rental stock has risen astronomically, which suggest it’s not quite right that landlords are pulling out of the market as a result of Brexit. This is supported in our findings, which reveal the number of landlords selling their buy-to-let properties hasn’t changed since April, when three landlords were selling up per branch.

It’s good to see less landlords hiking rents this month, but 24 per cent is still too high. The cost of renting is already high in many parts of the country and until the Government converts its pledges and promises into bricks and mortar, we won’t see renters reach a position where they’re able to save to get on the housing ladder. It will be interesting to see how this is tackled in the upcoming Autumn Statement.”

Wednesday, November 16, 2016

A seasonal fall of 1.1% (-£3,452) this month, a smaller drop than the 1.8% average over the last six years showing signs of a resilient market

Two beds or fewer rise by 1.7%, annual growth of £15,000 (+8.2%)

Those living with parents or aged between 21 to 24 are most likely to shun attempting to get on the housing ladder according to new research

The average first-time buyer now aged 33.

Miles Shipside, Rightmove's housing market analyst comments:

“Overall, house prices continue to hold up well. This is the smallest drop in average November asking prices since we saw the same figure of -1.1% in November 2011. Furthermore, the average time to sell of 65 days is one day quicker than at this time last year. However, price resilience is not good news for cash-strapped aspiring first-time buyers, and in spite of the more subdued time of year the smaller properties that they typically target have increased in price this month, the only market sector to show an increase. Compared to 12 months ago the price of newly-marketed properties with two bedrooms or fewer is up by over 8%, twice the rate of the sectors containing properties with three bedrooms or more. In the sprint to get onto the housing ladder, wage inflation to help meet lender affordability ratios and to save for the larger deposits required is being comprehensively outrun by price increases.

As well as helping people’s home-ownership aspirations, activity at the bottom rung of the ladder helps the rest of the market to move and through that boosts the wider economy. Short-term options that might be top of a first-time buyer’s list would be a stamp duty holiday exclusive to them. However, there are dangers to increasing demand unless this is matched by policies to improve supply, and more radical steps need to be taken to remove some of the barriers preventing more affordable homes to buy and rent from being built in the right locations.”

So freshers week is well and truly over and the dust is just settling for many student landlords. I was walking down Ecclesall Road in Sheffield very close to both Sheffield University and Sheffield Hallam University and couldn't help notice the numbers of student rental properties The area like many around our universities in towns and cities up and down the country has been taken oven by students and student landlords which even now has it's own name as evidenced by the fact that Studentification has it's own entry on Wikepedia. Is this a good thing? Probably not if you are a long standing member of the local community looking for a quiet life. However, things change. Areas change. Is it something that councils, politicians should interfere with? The market has spoken and for many people who own properties in these areas they have seen the value of their properties rise as student landlords compete to acquire valuable assets in areas hotly demanded by student landlords and tenants.